:00:00. > :00:07.This is Business Live from BBC News with Sally Bundock and
:00:08. > :00:13.Balancing the books in Russia - a budget cut is planned
:00:14. > :00:17.as the Kremlin copes with those oil prices falling off a cliff.
:00:18. > :00:39.Live from London, that's our top story on Friday the 15th of January.
:00:40. > :00:40.As oil prices languish near 30 dollars a barrel,
:00:41. > :00:42.the Russian government prepares for a year of austerity.
:00:43. > :00:49.China's answer to the World Bank, the AIIB, prepares for its official
:00:50. > :01:02.But will the new lender really shift the balance of power
:01:03. > :01:04.And we are 30 minutes into the European trading day -
:01:05. > :01:08.most of the main markets are headed lower as investors digest the latest
:01:09. > :01:14.swings in the oil price and Chinese stocks enter a bear market this
:01:15. > :01:15.And we'll be getting the inside track on the future of cars.
:01:16. > :01:21.Will they hover above the ground - well, the last one, probably not.
:01:22. > :01:23.Our technology correspondent Rory Cellan-Jones will be
:01:24. > :01:26.Today, we want to know - would you trust your car
:01:27. > :01:46.It's been another roller-coaster week for the price of oil -
:01:47. > :01:50.it's sinking again today after Thursday's brief rebound
:01:51. > :01:54.but earlier in the week, crude fell below 30 dollars a barrel
:01:55. > :01:55.- a level not seen since 2004.
:01:56. > :02:00.Countries dependent on the black stuff to keep their coffers
:02:01. > :02:01.lubricated are certainly feeling the strain,
:02:02. > :02:06.Today, the Kremlin is expected to announce a 10% cut in its annual
:02:07. > :02:13.Over half of the overall revenues for the government comes from oil,
:02:14. > :02:15.so as the price drops, there's a direct knock-on effect
:02:16. > :02:25.Last year's budget was based on an oil price of $50 a barrel -
:02:26. > :02:26.a price that is rapidly becoming a distant memory for oil producers.
:02:27. > :02:30.Russia had hoped this year would see a change in fortunes and for it
:02:31. > :02:33.to see a return to economic growth, having slipped
:02:34. > :02:45.But that is looking increasingly unlikely.
:02:46. > :03:05.10%, probably not enough. I was looking at the sums here. The
:03:06. > :03:10.Kremlin apparently will need oil to rise to $82 a barrel.
:03:11. > :03:16.To meet its current budget. You and I know that is not going to happen.
:03:17. > :03:22.10% is payment on account, if you like. It will not be the last and is
:03:23. > :03:30.not the first. This is a serious situation for Russia. Again, looking
:03:31. > :03:33.at numbers, estimates say if oil stays at $30 a barrel for the
:03:34. > :03:40.remainder of this year, it is likely to go even lower, but if it
:03:41. > :03:48.$30, it wipes Russia's currency reserves gone. Yes. Give us some
:03:49. > :03:56.more! The trouble for Russia is they have locked themselves into a
:03:57. > :04:01.situation where distributing this is the basis for the economy. I had the
:04:02. > :04:06.reform, they have had it for a long reform, they have had it for a long
:04:07. > :04:10.time but it was rejected by Putin when he returned in 2012. They are
:04:11. > :04:15.now reaping the consequences. They have nowhere to turn to except
:04:16. > :04:19.hoping the price will rise, somehow something will happen, or reform,
:04:20. > :04:26.which is dangerous for the regime. Just wonder if the economic action
:04:27. > :04:33.at the moment which is ritzy bleak could force Putin's hand to reform.
:04:34. > :04:37.-- pretty. To stop the sanctions and stop the Russian retaliatory
:04:38. > :04:42.sanctions which are crippling things like the financial services. That is
:04:43. > :04:50.good logic but it is improbable. His primary objective is for Russia to
:04:51. > :04:52.be a great power. It is significant the military budget is being
:04:53. > :04:59.protected and it is very large and growing. It would mean him stepping
:05:00. > :05:02.back from Ukraine which he is going to find it very hard to do. It would
:05:03. > :05:07.mean his finding some way to get out mean his finding some way
:05:08. > :05:10.of the mess he has made going into Syria in the first place and that is
:05:11. > :05:15.especially him. If the worst case especially him. If the worst case
:05:16. > :05:21.scenario plays out this year and oil continues to go down, some predict
:05:22. > :05:27.as low as $10 a barrel, that was the case for Russia and the people of
:05:28. > :05:30.Russia, how will that play out? If things become more chronic economic
:05:31. > :05:35.league, is that going to have a knock-on effect on Putin's
:05:36. > :05:37.popularity and any dissension? They have got the television and media
:05:38. > :05:46.locked down. They locked down for life. They have
:05:47. > :05:52.recently given their police the right to fire in crowds should they
:05:53. > :05:56.wish to do so, including women and children. How is the general public
:05:57. > :06:02.coping and is it tough? It is tough. The polls show they are not hopeful
:06:03. > :06:05.about the future. That is not the same thing as them saying, Putin has
:06:06. > :06:13.made a mess of things and replaced. To do that, you would need
:06:14. > :06:17.an idea of who and how might replace him, there is non-. Such a man or
:06:18. > :06:23.woman would need a programme. There woman would need a programme. There
:06:24. > :06:28.is no way to articulate a programme. So he is in a position where events
:06:29. > :06:35.have taken control. And he and we will have to see how it plays out.
:06:36. > :06:42.We appreciate your time, as always. And no doubt we will speak to you
:06:43. > :06:42.soon. Fruit and vegetable in Russia, inflation, 30%.
:06:43. > :06:48.It is difficult. announcement about budget cuts, we
:06:49. > :06:52.will update you. Goldman Sachs says it's struck
:06:53. > :06:55.a deal with the US Department of Justice to pay a $5.1 billion
:06:56. > :06:58.settlement over its marketing US banks have taken much
:06:59. > :07:02.of the blame for the 2008 crisis after granting mortgages
:07:03. > :07:03.to unqualified borrowers, then repackaging those loans as safe
:07:04. > :07:05.investments and selling The settlement comes
:07:06. > :07:09.after Wall Street rival JP Morgan reported better than expected
:07:10. > :07:11.profits for the three recovering to close 10.3% lower,
:07:12. > :07:21.after it confirmed there had been police raids on the company's
:07:22. > :07:23.facilities to investigate Investors are worried Renault might
:07:24. > :07:32.also be involved in cheating emissions tests, following
:07:33. > :07:42.the Volkswagen scandal last year. However, Renault stressed that tests
:07:43. > :07:43.have shown "no evidence" of devices designed to cheat tests,
:07:44. > :07:46.comments backed up by Fiat Chrysler Automobiles is denying
:07:47. > :07:50.allegations that it encouraged The car company is being sued
:07:51. > :07:58.by the owner of two US dealerships, who says it offered financial
:07:59. > :08:01.incentives to dealers to report unsold vehicles as sold and then
:08:02. > :08:03.cancel those sales Fiat Chrysler says it has carried
:08:04. > :08:25.out an investigation and found Check out our website. BHP, $7.2
:08:26. > :08:31.billion write-down on its onshore oil wrecks. That is another part of
:08:32. > :08:38.the falling oil price story. That is a lot of money. They are talking
:08:39. > :08:42.year ago, it had 26 and it had five year ago, it had 26
:08:43. > :08:48.by the end of the first three months of the year.
:08:49. > :08:49.Markets showing signs of being on the case. Let's talk about China
:08:50. > :08:51.now. Now, China's answer
:08:52. > :08:54.to the World Bank will be officially What is going on is much today is a
:08:55. > :09:02.Infrastructure Investment Bank - What is going on is much today is a
:09:03. > :09:10.big day for the Chinese. Hello. The AIIB as it is known will
:09:11. > :09:13.be launched officially in Beijing. The headquarters this weekend. It
:09:14. > :09:18.will hold its first board of directors meeting. This is a bank
:09:19. > :09:23.which focuses clearly on providing loans for Asia -based infrastructure
:09:24. > :09:28.projects including the likes of roads, health, education and energy
:09:29. > :09:33.projects designed to grow the economy is of the recipient
:09:34. > :09:38.countries getting the loans. China is the AIIB's largest shareholder
:09:39. > :09:41.but India and Russia are also big players and all 57 countries have
:09:42. > :09:47.signed up to the bank including many in Europe, controversially, like the
:09:48. > :09:51.UK, France and Germany who joined in spite of opposition from Washington.
:09:52. > :09:54.The US sees this as an attempt by China to come to Washington's
:09:55. > :09:59.efforts to increase its influence in Asia and it is seen as a challenge
:10:00. > :10:04.to existing institutions like the World Bank and the IMF. The AIIB has
:10:05. > :10:07.tens of billions of dollars to spend and is expected to make its first
:10:08. > :10:12.loans available in the second half of this year. Thank you so much.
:10:13. > :10:19.So that is in Beijing this weekend. A mixed picture on the markets. A
:10:20. > :10:24.Mini bounce back in Wall Street yesterday but that did not help
:10:25. > :10:27.Asia. China entering a bear market, stocks in Shanghai at 3.5%. That is
:10:28. > :10:34.Japan. This is Europe. Corporate Japan. This is Europe. Corporate
:10:35. > :10:40.stories making the headlines. The merger of British Telecom with EE
:10:41. > :10:46.has been given the Green light by authorities in the UK. That is
:10:47. > :10:50.affecting trade in London. We have mentioned BHP, listed in London as
:10:51. > :10:51.well. A lot going on and we will discuss the winners and losers.
:10:52. > :11:04.Let's look ahead now to Wall Street. Citigroup and Wells Fargo have
:11:05. > :11:08.reported fourth-quarter earnings. Citigroup makes up a substantial
:11:09. > :11:13.part of its revenue from Asia and America -- emerging markets, has it
:11:14. > :11:18.been affected by the slowdown in China? It is still expected to make
:11:19. > :11:25.a growth in earnings. The biggest presidential mortgage lender WeFargo
:11:26. > :11:32.experienced a big growth but with the exfoliate -- portfolio exposed
:11:33. > :11:36.to the oil sector, watchers will be interested to see how it affects the
:11:37. > :11:40.bottom line. Retail sales grew in December showing Americans are still
:11:41. > :11:43.spending and we will get businesses on business in the entries for
:11:44. > :11:49.November and manufacturing and business output for November.
:11:50. > :11:49.Good on you. Let's stay with the markets.
:11:50. > :11:51.Jeremy Stretch, Head of Foreign Exchange Strategy
:11:52. > :12:01.Good to see you. Let's talk about the connection, audio and the
:12:02. > :12:08.markets. We have seen a horrible two weeks of the trading year. Can you
:12:09. > :12:14.explain, oil continues to tumble, markets react. They reacting to $30
:12:15. > :12:20.oil or to the reason we have got $30 oil? It is $30 oil particularly for
:12:21. > :12:25.those economies reliant on oil your conversation about Russia was
:12:26. > :12:29.pertinent and Canada, under significant pressure, it has lost
:12:30. > :12:34.more than 10% of its value because of the correlation with oil. So
:12:35. > :12:40.direct economic relationships in oil producing companies -- countries but
:12:41. > :12:44.why is the price falling? Slower global growth and fears and eating
:12:45. > :12:51.from China as the big swing demand variable in terms of both -- growth
:12:52. > :12:54.projection causes the price to foil along with an excess of supply.
:12:55. > :13:00.Interesting to see how the day progresses. A lot of news coming out
:13:01. > :13:05.of the States. News from China about its money supply and its debt levels
:13:06. > :13:10.which was worrying today. Asia closing at a 3.5 year low for the
:13:11. > :13:15.week today. Angela Merkel is meeting with Mario Draghi in Berlin today.
:13:16. > :13:19.They are having a chat. I would love to be a fly on the wall!
:13:20. > :13:24.It is interesting because there is a degree of pressure in Germany
:13:25. > :13:30.have seen this in the comments from the Central Bank regarding the
:13:31. > :13:34.problems the German system has with negative deposit rates. The printing
:13:35. > :13:38.of money. It seems to be the case Mario Draghi is going to be facing
:13:39. > :13:42.relative criticism from Angela Merkel about the perception because
:13:43. > :13:49.of the legacy that brings. Generally when you find money printing, it
:13:50. > :13:57.boosts asset markets. But the Dax is down" and it is. It has created a
:13:58. > :14:01.degree of a bubble in the asset markets and Germany is mindful this
:14:02. > :14:06.policy could store up Rob Evans for the future. So it will be
:14:07. > :14:11.interesting to hear not an official version but unofficial versions of
:14:12. > :14:14.the conversations -- problems. You know the routine, right? You are
:14:15. > :14:17.You will take through the papers shortly.
:14:18. > :14:24.Most of us have one - and many of us use them daily.
:14:25. > :14:28.Will you trust your car to drive itself?
:14:29. > :14:31.We'll be discussing all that and more in just a few minutes.
:14:32. > :14:32.You're with Business Live from BBC News.
:14:33. > :14:35.A mega-merger in the UK's telecoms industry is likely to get
:14:36. > :14:43.To find out more about what this means, let's talk to Matthew Howett,
:14:44. > :14:59.So talk us through where we are at the moment, the competitions
:15:00. > :15:04.authority has said these companies can tie up. How will they have to
:15:05. > :15:05.change in terms of which bits BT might have to get rid of or anything
:15:06. > :15:19.like that, do we know anything? Essentially, the competition markets
:15:20. > :15:24.authority has said these companies are fine to join together. They are
:15:25. > :15:26.bringing together two fairly separate businesses. BT has a
:15:27. > :15:34.business around broadband and BT business around broadband and BT
:15:35. > :15:36.primarily. EE on the mobile side fairly complimentary. There should
:15:37. > :15:47.not need to be any changes to that business. Over time BT may look to
:15:48. > :15:52.further integrate the division. These are the things we will find
:15:53. > :15:56.out about in the coming months. Matthew, just briefly. What
:15:57. > :16:00.this mean for customers? Will base much of a difference in terms of
:16:01. > :16:05.pricing and customer service? At the end of the day, this is all about
:16:06. > :16:12.the customer. What BT is doing by buying EE, they are gambling on the
:16:13. > :16:16.fact that people want to take all of the services from one provider,
:16:17. > :16:22.something we call quad play, they will take TV, broadband, landline
:16:23. > :16:26.and mobile from one operator. It could lead to a form of cost saving.
:16:27. > :16:32.This is something that will be pursued in the coming months.
:16:33. > :16:37.Thank you for your time. There is so much more information about that
:16:38. > :16:45.British Telecom EE tie-up on our website. There is also the ode to
:16:46. > :16:54.deal with three to agree on -- 02. We will hear about that in the
:16:55. > :17:00.spring. You have interviewed Jimmy Wales,
:17:01. > :17:06.the founder of Wikipedia. Wikipedia is 15 years old this week.
:17:07. > :17:12.What would we do without it? It has enriched my life, Sally!
:17:13. > :17:18.balancing the books in Russia - as a new era of low oil prices begins,
:17:19. > :17:23.so the Kremlin looks to cut its budget by up to 10 %.
:17:24. > :17:26.And now let's get the inside track on the future of the car industry -
:17:27. > :17:30.one of the biggest money makers in the world at the end of a week
:17:31. > :17:35.where the big names in the business have been showing off their latest
:17:36. > :17:41.It's a market worth a whopping $800 billion a year -
:17:42. > :17:48.And big changes are in the works - to keep customers buying
:17:49. > :17:52.as well as address environmental concerns.
:17:53. > :17:56.Electric is gaining steam with brands like Tesla,
:17:57. > :18:00.that offer luxury and 4x4 all electric vehicles.
:18:01. > :18:05.We've seen prototypes for driverless cars from the likes
:18:06. > :18:08.of Google and others - but is that technology about to be
:18:09. > :18:18.Apple is thought to be developing prototypes as we speak.
:18:19. > :18:20.So could the traditional players soon be facing
:18:21. > :18:25.Lots of questions - and hopefully some answers.
:18:26. > :18:31.Our technology correspondent Rory Cellan-Jones is here.
:18:32. > :18:49.You had the pleasure of meeting Elon Musk. I drove to meet him in a car
:18:50. > :18:59.which was an exciting, slightly terrifying experience. Tesla make
:19:00. > :19:04.electric cars sexy. It is a electric and it accelerates like nothing on
:19:05. > :19:08.earth. It has a range of about 250 miles.
:19:09. > :19:14.features in it. You can switch on Lane control. You can sit there on
:19:15. > :19:19.the freeway, it will stay in Lane. You can keep a certain speed. You do
:19:20. > :19:28.keep your hands close to the wheel. It will even change Lane, indicate
:19:29. > :19:37.and automatically move out into the next lane. I am fascinated by this!
:19:38. > :19:41.It will do this. There is an extraordinary vision that this will
:19:42. > :19:46.be commonplace, in fact it will be the norm in about ten years' time.
:19:47. > :19:51.You will only dry if you want to dry. It will be like owning a car
:19:52. > :20:01.which is not self driving in the long-term will be like owning a
:20:02. > :20:09.horse, you will have it for sentimental reasons but not for
:20:10. > :20:16.daily use -- you will dry. I do not have a car for sentimental reasons!
:20:17. > :20:23.The point he's making is your car will completely automatically. You
:20:24. > :20:37.might dry a Europcar, you won't need to. It will come to you without much
:20:38. > :20:42.intervention. This man is an inspiring, brilliant thinker. What
:20:43. > :20:46.he's saying is a bit too extraordinary for
:20:47. > :20:51.when he said you will be able to pick up your car, if your car is in
:20:52. > :20:58.Los Angeles it will drive to New York to meet you, I said, maybe that
:20:59. > :21:03.that is a long time away. He said about two years. I think that is
:21:04. > :21:07.slightly mad. Think about the regulatory changes you need. The
:21:08. > :21:10.technology is evolving very fast, the regulation less so. Allowing
:21:11. > :21:17.driverless cars onto the road will be huge decision and will need a
:21:18. > :21:23.huge change in the structure. That is always the case of
:21:24. > :21:27.the regulation struggles to keep up. Thanks, Rory.
:21:28. > :21:29.To Switzerland now because exactly a year ago, the financial world
:21:30. > :21:31.was buzzing with a new word: Francogeddon.
:21:32. > :21:33.The Swiss National Bank shocked markets by abandoning its peg
:21:34. > :21:36.to the euro - causing the Swiss franc to soar in value.
:21:37. > :21:39.The policy, in place for three years, was designed to keep
:21:40. > :21:46.the franc low, and Swiss exports competitive.
:21:47. > :21:47.The move caught traders by surprise and even bankrupted one brokerage -
:21:48. > :21:50.but how much long term damage has it done to the Swiss economy?
:21:51. > :22:09.It was called Francogeddon, market mayhem one year ago. The Euro peg
:22:10. > :22:16.abandoned, the Swiss franc sword. Swiss exports and Swiss
:22:17. > :22:22.more expensive overnight. Disaster was predicted for Switzerland's
:22:23. > :22:26.economy but what did happen? Fortunately, the situation has been
:22:27. > :22:31.challenging but not dramatic. Many empathises could deal with the
:22:32. > :22:34.situation, without having some severe difficulties -- many
:22:35. > :22:38.enterprises could deal with the situation. How has Switzerland's
:22:39. > :22:46.economy avoided disaster? costs and increasing productivity is
:22:47. > :22:50.one way. Many workers here are now putting in a 45 hour week instead of
:22:51. > :22:55.the usual 40 at no extra pay. And more painful measures could follow.
:22:56. > :23:06.50% of all Swiss exports are sold in the euro zone. One measures firm
:23:07. > :23:13.take is to relocate their production because based on a currency rate of
:23:14. > :23:19.1.08 per euro now, the Swiss franc is still overvalued. Surveys show
:23:20. > :23:22.one in five Swiss manufacturers want to outsource, but that is not an
:23:23. > :23:27.option for the hard-pressed tourist industry. It hopes Switzerland's
:23:28. > :23:35.questionably stunning landscapes will push price back into the
:23:36. > :23:39.background. We have to concentrate on those experiences which are
:23:40. > :23:44.unique to our country. I think we have to sell Switzerland through the
:23:45. > :23:49.emotions, three something which you cannot buy. No Francogeddon yet
:23:50. > :23:55.then, but huge challenges ahead. Swiss businesses feeling the cold,
:23:56. > :24:02.and everyone agrees 2016 will not beat you seek, even for this usually
:24:03. > :24:04.resilient economy. It looks pretty.
:24:05. > :24:09.Jeremy Stretch is back to look at the papers.
:24:10. > :24:17.This treat from a regular James Newman, he says I don't trust my
:24:18. > :24:21.car's parking sensor. I trust driverless cars but not the people
:24:22. > :24:32.in them. Hermione says Mike are drives itself.
:24:33. > :24:36.I understand you have your own experience of this situation? I have
:24:37. > :24:40.a self parking mechanism on my car and the first time I used it it
:24:41. > :24:44.drove the car into the curb and damaged the wheels so I think there
:24:45. > :24:49.are teething problems! Did you have are teething problems! Did you have
:24:50. > :24:53.any recourse? Was based on the fact that the car in front was part badly
:24:54. > :25:01.so it was lining itself up with that. It is always the small print.
:25:02. > :25:04.On the subject of small print, a teenager, a 19-year-old UK teenager
:25:05. > :25:11.who is studying at Stanford University in the US, has come up
:25:12. > :25:16.with a robot lawyer to help bypass the massive fees. I
:25:17. > :25:21.interesting that he is studying in the US rather than the UK so he has
:25:22. > :25:26.perhaps decided the US situation is better. He has designed an algorithm
:25:27. > :25:30.to look at parking issues and provided an opportunity to come back
:25:31. > :25:37.with advice to deal with parking fines which are very easy to pick up
:25:38. > :25:43.as we all know. It is an attempt to revolutionise the sector and provide
:25:44. > :25:48.an opportunity for recourse. I think we should name him, Joshua Browder,
:25:49. > :25:54.studying computer science in the US. That is a name we should remember.
:25:55. > :25:56.Studying at Stamford, try harder, Josh, that is what
:25:57. > :26:03.There will be more business news throughout the day on the BBC Live
:26:04. > :26:08.webpage and on World Business Report.
:26:09. > :26:17.It is a cold, frosty start across the country that lovely and bright
:26:18. > :26:19.with some sunshine around.